An analysis of clinical trial registries, including ClinicalTrials.gov and Australian and New Zealand registries, has shown a 20% reduction in overall trial activity compared to this time last year, with oncology trials being hit hardest, said Aditya Kotta, Head of Business Development of US and EU at global contract research organisation (CRO) Novotech.
In a presentation at the 12th annual Outsourcing in Clinical Trials (OCT) UK and Ireland, Kotta discussed the emerging biotech landscape and how the market and funding conditions are driving decision-making when it comes to planning early phase programmes. The meeting took place on 10–11 June in London, UK.
The XBI biotech ETF has shown that biotech continues to underperform in comparison to S&P 500, observing a considerable downslide post-Covid-19. The top five biotech and pharmaceutical companies collectively have a market cap that would only equal one of the top five tech companies, indicating a market volume disparity. Kotta said the market had favourable conditions for companies to raise money based on preclinical data in 2020. However, there has been a downward trajectory in 2025, Kotta added. “The current market landscape for fundraising is similar to what we saw in 2019 so maybe a return to normalcy for those of us who have been in the industry prior to the Covid-19 bubble”, he highlighted.
Some therapeutic areas retain value
In the past 40 months, there has been an 18% reduction in the total number of publicly traded biotechs, and under current market conditions, it is becoming incredibly hard to raise capital to produce Phase II and III datasets, said Kotta. Based on data from US publicly traded companies, the focus has shifted to later-stage development, said Kotta, while noting a recent bounce-back in early-stage companies this past month.
Nonetheless, obesity and RNA-based therapies seem to have held value since the beginning of this year, said Kotta. There has been a recent optimistic spike in valuation growth in the therapeutic areas of oncology, immunology, infectious disease and central nervous system (CNS) disorders, and modalities such as gene therapies and RNA-based therapeutics across US public biotechs, he added.
Funding challenges and their impact on clinical trial activity
Kotta illustrated the impact of these funding challenges through an analysis of data from clinical trial registries such as ClinicalTrials.gov and the Australia and New Zealand clinical trial registries. The analysis demonstrated that year-on-year, there has been a 25% reduction in the number of interventional trials registered in the US. Macrotrends in the trials landscape have shown an approximate 20% reduction in clinical trial activity overall, Kotta noted. Oncology has been hit very hard in terms of funding, he added, with oncology trial activity dropping by approximately 60% in comparison to this time last year.
However, the rate of decrease in trials in Australia is far less compared to US trials, suggesting companies are turning away from the US and shifting to other locations, he said.
From the perspective of a global CRO with a presence in North America, Europe, and Asia-Pacific, Kotta said Novotech has been fielding enquiries about investigator-initiated trials in China, which are characterised by faster timelines, and lower costs, allowing sponsors to quickly get to proof of concept.
Even though there is uncertainty on whether data produced in other countries can be used for registrational purposes with the US Food and Drug Administration (FDA), sponsors are shifting to other trial locations such as Australia, New Zealand, China/APAC region and Eastern Europe for early-phase data. For sponsors, Kotta said the cost is less important in comparison to time to data readout, so companies are prone to spending a bit more on trials to advance their assets against competitors, he added. Another trend observed in today’s funding environment is the need for flexible contracting terms for deferred payments and milestone-based schedules.
